Methods and Procedures

     This section discusses the research methodology that was used in this study.  It also addresses the procedures for data collection and analysis as well as data quality and study limitations.

     The basis for this analysis uses a cost-effectiveness analysis methodology as identified in the text Cost-Benefit Analysis, Concepts and Practice, 2^nd Edition (Boardman, 2001).  I chose cost-effectiveness analysis due to the inability to monetize the cost of the system, the benefit of reduced medication errors, as well as other variables.  Cost-effectiveness analysis is an appropriate analytic technique when relevant costs and benefits associated with implementation and adoption of a technology, like POU, cannot be monetized.  POU functions much like a subsystem within the organization in that it touches all aspects of health care provision, but has few clearly measurable factors.

      Cost-effectiveness analysis follows a methodology similar to a cost-benefit analysis.  According to Boardman (2001), the basic steps followed for this cost-effectiveness analysis are identified below.

     1.  Specify the set of alternative projects.

     2.  Decide whose benefits and costs count (standing).

     3.  Catalogue the impacts and select measurement indicators.

4.  Predict the impacts quantitatively over the life of the project.

     5.  Monetize (attach dollar values to) impacts.

     6.  Determine cost of system and implementation

     7.  Make a recommendation based on analysis.

     In many cases, monetizing the impacts of implementation and quantitatively predicting the impacts over the life of the project are difficult and impractical steps.  These steps have been integrated throughout the results and discussion portions of this paper.

Specify the Set of Alternative Projects

     A continuum of possible alternatives exists for POU implementation.  A limited scope project would include a pharmacy or medical supply system employed in one or two areas; a full scope project would incorporate POU technology in all patient care settings.  For the economic assessment and analysis of this project, I considered two alternatives for point of use implementation at LRMC.  The first was a full-scale implementation and installation of point of use technology across all areas of Landstuhl’s medical system, which including inpatient and outpatient settings and all associated Army Health Clinics.   The other alternative considered was maintaining the status quo, making no changes to the supply or pharmacy system.  In order to recommend POU implementation, the benefits must be greater than current benefits enjoyed under the status quo. 

Decide Whose Benefits and Costs Count

     In a review of literature related to point of use technology, Jorgenson, Leiker, and Herzog (2002) identified several benefits of this technology. These include reduced supply and pharmaceutical expenditures; increased patient safety through the reduction of medication errors; increased ability to accurately charge patient accounts; improved supply tracking and inventory adjustment; and, avoidance of out of stock situations.   Additional benefits include improved access to supplies and medications, optimal space efficiency, better control of narcotics and ward stock medications, and the ability to accommodate future changes in hospital operations (Jorgenson et al.).  For this research, I identified reduced cost and increased reimbursements of primary importance due to their quantifiable impacts on the organization.  Reduction in errors and increased patient safety are also important from an organizational and patient care perspective.

Catalog the Benefits and Select Measurement Indicators

     The potential benefits of POU have been identified in the preceding section. The AMEDD Business Plan established measurement indicators in order to determine the impact and quantify the success of a POU system.  Short-term measurement indicators are as follows:

1. One time inventory reduction is determined by conducting an inventory to determine on-hand inventory prior to POU implementation.  Dollar value after implementation is easily determined through the reporting capabilities of the POU system.  Further costs are avoided provided this inventory is not allowed to re-grow.  

     2.  Reduced consumption is measured by calculating the cost per patient day and cost per case/visit as the primary measurement indicators before and after POU implementation.

     3.  Improved labor efficiency is quantified by estimating the staff’s time spent inventorying, ordering, and stocking supplies before POU implementation, which is then multiplied by the average wage of staff responsible for managing supplies.  In the pharmacy, time spent restocking/pre-packing carts, system management, missed first dose, and cassette fill/exchange are four areas which are reduced through POU.  Zero balances and stock outs are effectively eliminated through POU and the time spent investigating these issues is eliminated. 

     Long-term measures are also established in the AMEDD business plan.

     1.  Reduced utilization is possible because staff quickly learns what is needed and used in a given location and provides comparative feedback to managers and providers.

     2.  Managers can preclude inventory creep by easily identifying supplies and excess items stored outside the POU cabinet.  Leadership must plan sufficient cabinet space to enable the storage and management of all supplies inside the POU cabinet.

     Although these measures are excellent indicators of the impact of POU technology, they provide no prospective information on forecasting impacts before implementation.  This project utilized a non-experimental research design using historical data on a number of organizational variables in an effort to predict the impact of POU on the LRMC health system.

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